Average fuel poverty gap projected to rise by £25 in 2022

The average fuel poverty gap is expected to increase by £25 this year as spiralling energy bills are partially mitigated by progress on making homes energy efficient, according to projections published by the government.

The latest edition of the Annual Fuel Poverty Statistics, which were published on Thursday (24 February) by the Department for Business, Energy and Industrial Strategy, only contain a full analysis of the data until 2020.

However, the publication also contains more up to date projections on levels of fuel poverty.

They show that the average fuel poverty gap for England is expected to be £258 this year, up 15% in real terms since 2020 when the figure was £223. The figure, which describes the reduction in fuel costs that would be required to remove the average fuel poor household from fuel poverty, is projected to be £233 in 2021.

The widening of the gap is largely being driven by rising energy prices, according to the annual update.

The price cap hike from April, announced earlier this month, is projected to lead to a “substantial increase” in the average fuel poverty gap.

The report also cautioned that because the first quarter of 2022, which is likely to be the coldest of the year, was under the previous lower price cap, the projections do not capture the full extent of expected increases in the 2022/23 financial year.

However, the proportion of households in fuel poverty is forecast to continue to decrease from 13.2% in 2020 to 12.5% in 2022 as a result of energy efficiency improvements.

The fuel poverty rate is also expected to fall thanks to the increased eligibility for the Warm Home Discount and other support measures, announced by the government earlier this month.

In addition, above average growth in incomes for households on the margins of low-income is also anticipated to “slightly” reduce the rate of fuel poverty.

However, the rate of decrease in fuel poverty has slowed due to a combination of changes in incomes, the pandemic and higher energy prices

The aggregate fuel poverty gap for England is projected to be £779 million in 2022 – an increase of 10.5% in real terms since 2020.

In terms of progress on tackling fuel poverty, the report found a small drop in the number of households in fuel poverty from 3.18m to 3.16m from 2019 to 2020.

The average fuel poverty gap for England in 2020 was estimated at £223, down by 2.3% since 2019, when it was £229.

Peter Smith, director of policy and advocacy at National Energy Action, said the charity estimates that the “true” number of households in fuel poverty across the UK will increase to 6.5m households in total by April.

He also said that the 200,000 drop in the number of households between 2019 and 2020 exposed the “hugely alarming lack of progress to meet the UK government’s statutory fuel poverty commitments”.

“By 2030 there should be no fuel poor households living in energy inefficient homes. But, based on current progress, instead of eight years, it will take over 60 years for that to happen.

“The government also had a clear goal to improve the least efficient homes by 2020, but over 180,000 of the poorest households in England are languishing in the most expensive to heat homes.”

Adam French, consumer rights expert at Which?, said: “It’s hugely concerning that more than one in eight households in England were in fuel poverty in 2020 – long before the energy crisis hit.

“When the new price cap takes effect in April, it’s clear many households will need substantial support in the coming months if they are to cope.”

The projections from BEIS do not reflect the latest surge in energy prices resulting from the crisis in Ukraine, which was invaded by Russia on Thursday. Investec has warned that the price cap is now on track to rise to £3,238 in October – a 64% increase over the new price cap level of £1,971 from April.